Platform, Anonymity, and Illegal Actors: Evidence of Whac-a-Mole Enforcement from Airbnb

Airbnb, a prominent sharing-economy platform, offers dwellings for short-term rent. Despite restrictions, some sellers illegally offer their accommodations, taking advantage of a degree of anonymity proffered by the platform to hide from potential enforcement. We study the extent to which enforcement works in Manhattan, one of the most active short-term rental markets, by testing the effects of two recent enforcement events. We find a negative effect on the number of entire-home listings in Manhattan and positive effects on the prices and occupancies of remaining listings following each enforcement event, which suggests that some illegal listings are withdrawn from the market. We demonstrate evidence suggesting that a portion of withdrawn listings reenter the market under the less enforced listing category of private rooms.